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Charles Evans on the inflation and FED's decisions
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Loading...Inflation may rise to 2.5% before the Fed begins to raise interest rates again, says Fed Chicago president Charles Evans.
At the moment of the Fed's observations, inflation is still far from reaching the cus- tomary 2% since the start of the 2009 recovery. Mainly inflation is about 1.7% on an annual basis.
Jump to 2.25% or 2.5% in inflation is not as much a worrying factor for Evans. He would be more excited about a decline in purchasing power that would lead to a reduction in inflation expectations or actual inflation. Then fiscal policy will have to be put on hold - or even loosened - to take the necessary measures for the Federal Reserve.
Evans' comments come a few days after FOMC was agreed not to raise interest rates this year. Markets are expecting an even more passive FED, with futures valuing the chance of pruning interest rates by 62 percent by December 2019.
According to Evans, FED should consider new interest rises only if growth returns to its potential levels, and inflation is boosted. Above all, inflation, which does not involve changes in food and energy prices.
Source: CNBC
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